Tuesday, June 17, 2008

"This is where I stick my neck out. My bet is that the economy is slowing, it will continue slowing, it will slow by at least as much as the Reserve Bank is seeking and probably more.

In short, if our luck runs out we'll slow to the point of recession.If we do reach that point, my bet is the recession will be a severe one.

If I'm anywhere near right, concerns about inflation will soon evaporate, as will the financial markets' expectations of more interest rate rises to come.

The evidence that the economy is already slowing quite sharply is now strong. Retail turnover has shown negligible growth in the first four months of this year.

In trend terms, approvals for the construction of new private dwellings have fallen each month since November. Similarly, the number of loans approved for owner-occupied homes has fallen each month since November."Read on...